The Failure of Common Knowledge

By Douglas E. French

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There are certain things that everyone knows. Everyone knows that you should get as much formal education as possible, buy a house as a solid investment, look to the stock market as an economic barometer, and trust the Fed as the nation’s money manager. Other thing that everyone knows: prisons keep us safe from predators. But what if all of these things are wrong, not just a bit wrong but wholly incorrect?

What if the reverse is true? What if, for example, that by hanging around in school for as long as possible is the worst life step you can possibly take? What if the real criminals are still in the streets but most people behind bars are not really threats to anyone? In The Failure of Common Knowledge, Doug French applies economics and contemporary facts to upend many common assumptions people make about critical life decisions. He shows that the common views do not take account of the real costs and risks — or the actual facts on the ground of our crazy, mixed-up world. For many decades, for example, young couples have believed that buying a house is a great way to invest money and start accumulating capital.

Problem: the housing crisis is not yet resolved. There is a good chance that the house will go down in value. Not only that: a market setting, a house should naturally depreciate over time. What we saw for decades was caused by government intervention. Plus, a house is a gigantic restrictions on the range of choice people have about where to live. It can also be a money pit for endless accumulation and spending. It can actually ruin your life.

As a banker in the boom times, Doug French saw first hand how people’s wrong assumptions about how life should work left massive carnage and ruined lives. Today millions struggle with underwater homes, underwater student loans, and underwater investment portfolios. They believed the propaganda being dished out by government and special interests rather than thinking for themselves. This book is a training guide for how to navigate a very confusing economic environment.

Its lesson is: do not trust the governing elites to run your life. Government mis-manages everything. Why let it manage your life? You have to think for yourself to avoid the traps that special interests have set up at every turn. You have to subject “what everyone knows” to critical standards of rationality and economic logic. French’s book is a primer for starting this process now. It is helpful for anyone of any age who seeks to avoid disastrous life decisions.